The Monetary Tones of Central Banks
By Musa Amadeus, Michael Guidi, Marvin Loh, Gideon Ozik and Ronnie Sadka
We show that media-derived measures of central bank hawkishness provide a powerful and persistent signal for forecasting government bond yield movements across global fixed income markets.
In this paper, we show that media coverage of central banks contains valuable information about future government bond yield movements across countries. By measuring whether financial media narratives are relatively hawkish or dovish, we construct monetary tone indicators for 15 developed and emerging market central banks and find that countries associated with more hawkish coverage subsequently experience larger increases in bond yields. These signals remain predictive after controlling for traditional fixed income factors and are especially effective when measured using a large language model. The findings suggest that media-derived monetary narratives provide investors with a practical tool for monitoring policy expectations, identifying relative-value opportunities, and anticipating movements in global rates markets.
